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Developing the Optimal Lifecycle for Successful Promotions

The e-commerce space is becoming increasingly competitive as brands and retailers recognize the importance of an omnichannel commerce strategy. In response, retailers will need to explore other means of differentiation. A unique opportunity: promotions.

This pricing strategy can encourage repeat customers to buy their favorite products sooner and take advantage of lower prices, or intrigue new shoppers to engage with an unfamiliar brand and get the better deal. Yet according to POI, 69% of retailers believe the time required to create a promotional plan is “highly burdensome.”

The act of coordinating a promotion is not a siloed project. Successful promotions start in the negotiation phase and incorporate scenario testing throughout the planning process. So how can retailers make the right pricing and promotion decisions to truly boost profits without wasting time? By following these best practices.

Planning for Promotions Ahead of Time

Before retailers can offer their customers the best deals, they must find a profitable way to lower the price. Pricing should be aligned with the agreement lifecycle and starts the moment a retailer begins negotiating with a potential partner. The negotiations period is the perfect time for retailers to seek additional flexibility in the budget by finding the supplier, courier or partner with the lowest cost or the highest ROI.

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Once the best deal is secured in the negotiation phase, retailers should ensure there is only one source of truth between the retailer and the new partner. This can done be through an automated agreement lifecycle management tool, which ensures both parties have the most up-to-date information. With enhanced information sources comes a reduction in misunderstandings so the retailer has room to test a promotion without impacting margins.

Next, the careful collaboration established between retailer and partner should also be extended to all internal communication. By using a single platform for all details related to the promotion, all corporate team members can make informed decisions without having to consult numerous spreadsheets or rely on manual practices. With this, marketing and merchandising teams can share a single vision for every promotion to reduce errors like conflicting or overlapping offers.. Communication, transparency and adequate planning create opportunities for retailers looking to provide strong promotions.

Testing Scenarios to Guarantee Success

The reward of offering a sale does not have to involve risk. For many retailers, margins have been tight in 2021, particularly as the industry is rocked by labor shortages and supply chain commotion.

As the 69% of retailers pointed out in the aforementioned POI survey, promotional planning takes time, and employee time costs money. Even with effective planning, the act of introducing a promotion will have some additional labor costs associated. Therefore, retailers must take careful note of whether a promotion will truly have the desired impact on margins and overall profitability.

This being said, promotional planning goes beyond pricing. If the promotion successfully draws in new customers, is there enough inventory to support the demand? If the demand spikes in one geographic region, will the shipping couriers be able to deliver the products within the designated delivery timeline? These questions, along with hundreds of factors to consider when planning a promotion, should never be answered with uncertainty. Scenario testing is critical prior to enacting a promotion.

Retailers should invest in predictive demand-driven forecasts and customer-centric simulations across all channels and customer segments. With the right input data and a well-configured dashboard, retailers can quickly compare different promotion opportunities to ensure that the selected promotion will deliver against the financial objectives, while also being attractive to shoppers and generating loyalty.

This also works for promotions created in tandem as part of a marketing campaign, wherein it is essential for retailers to see an overall evaluation of predicted success. Scenario testing takes the guesswork out of promotion planning by using data and analytics to forecast the results and ensure profitability.

Delivering the Best Customer Experience

Customers today are not homogenous. The promotion that intrigues one segment of your customer base may not resonate with another segment. It’s important that retailers incorporate demand data into every step of the planning process.

Automated promotional planning tools can automatically determine the most effective strategy for each segment. This can include a wide variety of customer behavior metrics, from time spent in-store or online and individualized open rates for newsletters to average basket sizes and common repeat purchases. With this level of customer data comes more impactful promotions that reduce misused advertising dollars or other wasted communication efforts.

For example, a promotion on half-priced jelly might intrigue a shopper who usually buys peanut butter from your store. Or an online promotion on the specific category page might be more effective for the shopper who spends time browsing the website rather than immediately searching for one product. Personalized promotions can create a more mutually beneficial relationship between the retailer and their shoppers, which leads to improved customer loyalty and increased sales.

Saving Time and Improving the Benefits of Promotions

Retailers that make promotions a priority rather than an afterthought, and take the time to understand the customer and the impact the deal will have on the business, will have more effective promotions. And as consumers grow more sophisticated and “channel-blind,” automated planning of promotions and advertising campaigns becomes essential to having a competitive edge. By planning ahead, promotions can be less tiresome and more worthwhile, ultimately boosting customer loyalty, sales and profitability.


Stefan Hilger is a Member of the Executive Board of gicom AG and is known as “the networker” on the board of directors. He has been the Managing Director of the gicom group with branches in Overath/Cologne, Germany and the United States since 2008. He is responsible for sales, marketing and consulting. In addition, he is the primary contact for the long-standing and successful innovation partnership with SAP.

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